Medicaid waiver could be boon for Texas hospitals

By DON FINLEY, STAFF WRITER |
December 12, 2011

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The federal government on Monday granted Texas a waiver that could mean billions more in Medicaid dollars to hospitals over the next few years in return for having them work together to provide better care for the poor.

"This waiver will allow us to replace an archaic federal Medicaid funding system with one built around local solutions that reward hospitals for patient care and innovation," said Tom Suehs, executive commissioner of Texas Health and Human Services.

In a conference call with reporters, Cindy Mann, director of the federal Center for Medicaid and CHIP Services, said the waiver "will expand the use of Medicaid managed care, and it will give doctors and hospitals funding to offset the cost for caring for the uninsured, and also to help health care providers take steps to improve the care that they provide."

State lawmakers cut deeply into the Medicaid budget this year, in part by requiring all Texas Medicaid patients to be enrolled in private health maintenance organizations for their doctor care. In recent years, patients in most urban areas were covered by HMOs, while patients in many rural counties and the Rio Grande Valley had their doctor bills paid directly by Medicaid.

The problem was, enrolling everyone in managed care plans threatened to violate the terms of an existing waiver that paid hospitals separately and at much higher rates - equal to what Medicare pays.

"That's why this waiver is so important," Dr. Dan Stultz, president of the Texas Hospital Association, said in Austin last month at a program organized by the Kaiser Family Foundation. "We do want as a state to expand Medicaid managed care, but we don't want to lose the billions and billions of dollars in Medicaid, because it helps subsidize this shortfall the hospitals are facing."

To get that extra money for hospitals, local tax funds are put into a state pool to draw down more federal funds.

The new plan could lead to even more money for hospitals - as much as $6.2 billion in the final year of the five-year waiver, up from about $2.8 billion this year. But it would require hospitals in each region to work together to improve care for the poor.